BMC Software Exceeds Second Quarter Earnings and Revenue Estimates
Remedy® and Key Distributed Systems Businesses Report Strong Results
HOUSTON - (October 30, 2003) - BMC Software, Inc. [NYSE: BMC] today announced financial results for its fiscal 2004 second quarter ended September 30, 2003.
BMC Software's net earnings excluding special items for the second quarter of fiscal 2004 were $22.2 million, or $0.10 per diluted common share, which compares to net earnings excluding special items of $19.3 million, or $0.08 per share in the second quarter of fiscal 2003. This exceeds the $0.04 to $0.06 per share range that the company provided in July and the current analyst consensus estimate of $0.05 per share. The fiscal 2004 second quarter net loss on a GAAP basis was $13.2 million, or a loss of $0.06 per share, which compares to net earnings of $10.1 million, or $0.04 per share, in the second quarter of fiscal 2003. Included in the financial tables is a reconciliation of results excluding special items and GAAP results.
"I am pleased with our results in the second quarter as we exceeded our earnings per share and revenue estimates. Our PATROL® and Distributed Systems Data Management product lines both reported sequential and year-over-year license revenue growth," said Bob Beauchamp, president and CEO, BMC Software. "Our Remedy business is outperforming our revenue and earnings expectations quarter after quarter and has been a significant contributor to our bottom line. Remedy is an integral piece of our Business Service Management (BSM) strategy that is continuing to gain momentum as customers and partners alike recognize its value."
Total revenues in the second quarter of fiscal 2004 were $333.8 million, an increase of 15 percent compared to the same quarter of fiscal 2003. Total license revenues in the quarter were $124.7 million, an increase of 4 percent compared to the same quarter of fiscal 2003. Maintenance revenues were $188.2 million, an increase of 25 percent, compared to the same quarter of fiscal 2003. Professional services revenues were $20.9 million, an increase of 5 percent compared to the same quarter last year. Operating expenses, excluding $15.3 million of amortization of intangibles and $34.4 million related to restructuring efforts, were $320.8 million, compared to $281.5 million in the same quarter of fiscal 2003. These results include Remedy's operations in the second quarter of fiscal 2004. Total revenues for Remedy in the second quarter were $60.3 million and expenses were $39.2 million, excluding $12.0 million of amortization of intangibles.
BMC Software maintained its strong financial position with cash flow from operations in the quarter of $34.1 million, including $18.5 million in restructuring charges. At quarter-end, the cash and marketable securities balance was $1.04 billion and the total deferred revenue balance was $1.14 billion.
BMC Software continued its stock repurchase program by spending $30 million to repurchase 2.1 million shares during the second fiscal quarter. Approximately $387 million remains in this program.
Second Quarter FY04 Business Segment Results
Q2 License Revenues (in millions)
Percent Growth vs. Q2FY03 (Y/Y)
Percent Growth vs. Q1FY04 (Sequential)
Data Management - D/S
$11.6
7%
24%
Data Management - Mainframe
34.5
(20)%
34%
Enterprise Data Management
46.1
(15)%
31%
Scheduling & Output Mgmt.
12.5
(18)%
(5)%
MAINVIEW®
10.8
(47)%
10%
PATROL
30.1
9%
19%
Enterprise Systems Management
53.4
(16)%
11%
Remedy
23.1
N/A*
11%
Security & Other
2.1
(30)%
(40)%
Total License Revenues
$124.7
4%
16%
*Remedy was acquired in November 2002.
Restructuring Update
The restructuring effort that the company announced in July is proceeding as planned. The company continues to expect that the restructuring will result in annual cost savings of $100 million to $120 million. The charges related to the restructuring were $34.4 million in the second quarter and were primarily associated with personnel related actions. BMC Software expects a $68 million to $73 million charge in the third quarter as downsizing and disposition of its facilities worldwide are completed.
Third Quarter and Fiscal 2004 Guidance
BMC Software expects high single digit revenue growth in the third quarter compared to the second quarter and earnings per share excluding special items to be in the $0.15 to $0.20 range. For fiscal 2004, the company is raising its guidance for earnings per share excluding special items to be in the $0.48 to $0.53 range.
Third quarter estimates do not include an estimated $0.05 per share of amortization of acquired technology and intangibles, and an estimated $0.20 to $0.21 per share related to restructuring charges.
Fiscal 2004 estimates do not include an estimated $0.19 of amortization of acquired technology and intangibles, and an estimated $0.30 to $0.31 per share related to restructuring charges.
BMC Software maintains its cash flow from operations guidance for fiscal 2004 to be in the $340 million to $390 million range.
A conference call to discuss second quarter results is scheduled for today at 11:00 a.m. CST. Those interested in participating may call (719) 457-2641 and use the passcode BMC. To access a replay of the conference call, which will be available for one week, dial (719) 457-0820 and use the passcode BMC. A live webcast of the conference call and presentation will be available on the company's website at www.bmc.com/investors. A replay of the webcast will be available within 24 hours and archived on the website for 90 days.
Non-GAAP Financial Measures
This press release includes financial measures for net earnings, earnings per share (EPS) and operating expenses that exclude certain charges and therefore have not been calculated in accordance with U.S. generally accepted accounting principles (GAAP). A detailed reconciliation between the GAAP results and results excluding special items (non-GAAP) is included with the financial tables accompanying this press release. BMC Software has provided these non-GAAP measures in its press releases reporting historical financial results because the company believes these measures provide a consistent basis for comparison between quarters, as they are not influenced by certain non-cash or non-recurring expenses and are therefore useful to investors in helping them understand the financial condition of BMC Software by focusing on the performance of its core operations. Management uses these non-GAAP financial measures internally to evaluate the company's performance and as a key variable in determining management compensation. These non-GAAP measures should not be considered an alternative to GAAP, and these non-GAAP measures may not be comparable to information provided by other companies.
About BMC Software
BMC Software, Inc. [NYSE:BMC], is a leading provider of enterprise management solutions that empower companies to manage their IT infrastructure from a business perspective. Delivering Business Service Management, BMC Software solutions span enterprise systems, applications, databases and service management. Founded in 1980, BMC Software has offices worldwide and fiscal 2003 revenues of more than $1.3 billion. For more information about BMC Software, visit www.bmc.com.
This news release contains both historical information and forward-looking information. Statements of plans, objectives, strategies and expectations for future operations and results, identified by words such as "believe," "anticipate," "expect" and "guidance" are forward-looking statements. Numerous important factors affect BMC Software's operating results and could cause BMC Software's actual results to differ materially from the results indicated by this press release or by any other forward-looking statements made by, or on behalf of, BMC Software, and there can be no assurance that future results will meet expectations, estimates or projections. These factors include, but are not limited to, the following: 1) uncertainty regarding future economic conditions worldwide may continue to affect the overall demand for software and services and any worsening of significant economies could result in decreased revenues or lower revenue growth rates; 2) BMC Software's revenues and earnings are subject to a number of factors, including the significant percentage of quarterly sales typically closed at the end of each quarter, that make estimation of operating results prior to the end of a quarter extremely uncertain; 3) BMC Software's operating costs and expenses are relatively fixed over the short term; 4) increased competition and pricing pressures could adversely affect BMC Software's earnings; 5) growth in BMC Software's mainframe revenues is dependent on demand for significant additional mainframe MIPS capacity; 6) BMC Software's maintenance revenue could decline if maintenance renewal rates decline or if license revenues do not grow; 7) new software products and product strategies may not be timely introduced or successfully adopted; 8) BMC Software's quarterly cash flow from operations is and has been volatile and is dependent upon a number of factors described in BMC Software's filings with the SEC; 9) the additional risks and important factors described in BMC Software's quarterly reports on Form 10-Q and in its Annual Report to Stockholders on Form 10-K for the fiscal year ended March 31, 2003 and other filings with the SEC. BMC Software undertakes no obligation to update information contained in this release.
